EH.Net Mailing List Archive: SocSec

In the white paper, we have the following :  
  
I. Will Social Security be "bankrupt" by 2042?  
  
Yes. Bankrupt means "having insufficient assets to cover one's debts,"1 =  
which applies to  
Social Security in 2042, according to the Social Security Trustees most =  
recent report.2  
  
  
  
Beginning in 2042, the Social Security Trust Fund will be exhausted. At =  
that point, the  
resources available to the system (payroll taxes plus some income taxes =  
on Social Security  
benefits), will be insufficient to cover the liabilities of the system =  
(benefits scheduled for  
retirees, people with disabilities, and other beneficiaries). If nothing =  
is done to correct this  
problem, benefit payments would have to be reduced by roughly 27 =  
percent.  
  
  
Although this might not technically be a lie, it is effectively a total =  
deception.  
  
If the exhaustion of the SSTF is coincident with the end of 2042, then =  
in 2042 the requirement for general taxes and/or new borrowing by the =  
Treasury to redeem TF bonds also comes to an end. In 2043, the level of =  
general taxes and/or new Treasury borrowing that would be required to =  
make up the 27% shortfall would be insignificantly different from that =  
required in 2042 to redeem the TF bonds. Only the name and description =  
of the taxes and borrowing would have changed, not the dollar amounts.  
  
It would seem to be one of the most predictable political decisions in =  
history for Congress to decide to simply continue the level of general =  
taxes and/or borrowing over the 2042/2043 boundary, rather than abruptly =  
reducing SS payouts by 27%.  
  
If the exhaustion of the SSTF is thus such an economic non-event, then =  
the economic reality of the SSTF is clearly a fiction.  
  
Regards, Don  
  
Don Lloyd  
Peabody, MA